Payhawk raises €3 million in seed funding round

Payhawk, a European paperless expense management provider, has raised €3 million (about $3.3 million) in a seed funding round led by Earlybird Venture Capital.

Payhawk, which was founded in Sofia, Bulgaria, and has offices in Berlin and London, completed the round was led by Earlybird Venture Capital, which was a notable early investor in the German challenger bank N26. Joining Earlybird was venture firm TinyVC and individuals such as Mark Antipof, ex-chief commercial officer at Visa Europe and Keith Robinson, chief strategy officer at Sage.

The funding round — its third in the last 18 months — will be used to expand Payhawk’s presence in the German market.

“Neobanks paved the way for great customer experience in payments. AI and machine learning already outperform manual data entry of invoices and cloud-based expense apps have existed for more than a decade. Payhawk decided to combine the best of what exists today and integrate it into a next-generation platform with a great customer experience without forcing businesses to switch banks,” said Roland Manger, co-founder and partner at Earlybird in a blog post.

Payhawk serves more than 1,000 customers in 14 European countries with its expense management platform that manages the entire spend lifecycle. It begins when an employee requests money, then loads funds to a physical or virtual Visa corporate debit card and all approvals or controls are managed through the platform. Receipts are captured both electronically and with photos uploaded to the system. A data extraction algorithm reads the receipts and enters the information into an accounting system, along with daily reconciliations.

Payhawk leverages PSD2 and Open Banking to connect directly to over 3,000 banks across the European Union. It also benefits from new data management and storage laws such as Germany’s GoBD law, which governs how companies store paper receipts in digital archives in a tax-compliant manner.

“In many companies, expense management is still far too bureaucratic, non-transparent and full of paperwork. Many employees are forced to spend personal funds, manually track expenses with the legacy expense apps, write cumbersome reports and wait months to get reimbursed. Our payment solution addresses exactly this pain point and supports businesses in their transition to a new, paperless and digital age without being forced to switch banks,” said Hristo Borisov, founder and CEO of Payhawk in the blog post.

According to Crunchbase, a website that tracks investments in private companies, Payhawk has raised a total of €3.6 million (about $4 million) over three seed and pre-seed fundraising rounds since July 2018, including this round.